Intel forecast to stay top chip maker - East Valley Tribune: Business

Intel forecast to stay top chip maker

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Posted: Thursday, November 2, 2006 5:26 am | Updated: 3:19 pm, Fri Oct 7, 2011.

Intel Corp. will easily retain its ranking as the world’s largest semiconductor company this year even though its sales are projected to drop 11 percent from 2005, according to a Scottsdale-based market research firm.

IC Insights, which tracks the performance of the largest semiconductor companies, also said Freescale Semiconductor will check in at No. 10 on this year’s list of the top 15 semiconductor producers.

Intel and Freescale, the former semiconductor unit of Motorola, both have large chip foundries in the East Valley. Santa Clara, Calif.-based Intel operates two major campuses in Chandler while Austin, Texas-based Freescale owns manufacturing plants in Chandler and Tempe.

IC Insights’ predictions for the full year are based on announced sales fi gures through the first three quarters and forecasts for fourth quarter sales.

Intel’s sales this year have been hurt by divestiture of some business units but mostly by intense competition, which has reduced prices for the company’s microprocessors and flash memory chips - chips that retain their data even when power to the chip is turned off.

“Both markets where they have exposure are under pricing pressure,” said Bill Mc-Clean, president of IC Insights.

Freescale is growing at about the market average this year, a good enough performance to keep the company in the top 10, he said.

“They’re doing pretty well in the cell phone market, and they are good in automotive. But automotive is softening right now,” he said.

The rankings reflect a trend of divestiture in the semiconductor industry with Infineon, a German company, spinning off its memory business this year to a separate company called Qimonda. Infineon, which had been the world’s fifth-ranked company, dropped down the list to 14 while Qimonda is 15th.

Because of the breakup, everyone else on the list moved up no notch in rank, McClean said. For the purposes of consistency, IC Insights figured 2005 comparisons as if Infineon and Qimonda had been separate companies.

“Companies are becoming more focused,” he said. “They realize they can do only one or two things well.”

McClean doesn’t believe Intel will lose its top ranking anytime soon, but added this year was a “wake-up call” for the company.

“We’ve seen the reaction of the company and their focus and recommitment to the processor business,” he said. “They can throw a lot of research dollars into new processors and advanced manufacturing capacity. They have a lot of strengths.”

Advanced Micro Devices, Intel’s top competitor, is expected to grow 35 percent this year as its gains in market share more than offset the market price pressures. In total, the top 15 companies are expected to grow 8 percent this year, which matches IC Insights’ forecast for growth in the entire industry. If Intel’s drop is excluded, the combined sales of the remaining 14 companies are expected to jump 14 percent.

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